- Malmsten, Ernst, Erik Portanger, and Charles Drazin. Boo Hoo. London: Arrow Books,
2001. ISBN 0-09-941837-1.
- In the last few years of the twentieth century, a
collective madness seized the investment community, who stumbled
over one another to throw money at companies with no sales, profits,
assets, or credible plans, simply because they appended “.com” to
their name and identified themselves in some way with the Internet.
Here's an insider's story of one of the highest fliers, boo.com,
which was one of the first to fall when sanity began to return
in early 2000. Ernst Malmsten, co-founder and CEO of boo, and
his co-authors trace its trajectory from birth to bankruptcy.
On page 24, Malmsten describes what was to make boo different:
“This was still a pretty new idea. Most of the early American
internet companies had sprung from the minds of technologists.
All they cared about was functionality and cost.” Well, what happens
when you start a technology-based business and don't care
about functionality and cost? About what you'd expect: boo managed
to burn through about US$135 million of other peoples' money in 18
months, generating total sales of less than US$2 million. A list of
subjects about which the founders were clueless includes technology,
management, corporate finance, accounting, their target customers,
suppliers, and competition. “Market research? That was something
Colgate did before it launched a new toothpaste. The internet was
something you had to feel in your fingertips.” (page 47). Armed with
exquisitely sensitive fingertips and empty heads, they hired the usual
“experts” to help them out: J.P. Morgan, Skadden Arps, Leagas Delaney,
Hill & Knowlton, Heidrick & Struggles,
and the Boston Consulting Group, demonstrating once again that the
only way to screw up quicker and more expensively than ignorance
alone is to enlist professional help. But they did have style: every
ritzy restaurant, exclusive disco, Concorde day-trip to New York,
and lavish party for the staff is chronicled in detail, leaving one
to wonder if there was a single adult in the company thinking about
how quickly the investors' money was going down the drain. They spent
more than US$22 million on advertising and PR before their Web site
was working which, when it finally did open to the public, took
dial-up users four minutes to download the Flash-based home page and
didn't accept orders at all from Macintosh users. But these are mere
matters of “functionality and cost” which obsess nerdy technologists
and green eyeshade entrepreneurs like myself.
July 2004 